Bigger than DVDs, bigger than cinema box office, bigger than music and bigger than books, the video games industry is big business.

With global software revenues exceeding $50bn (£32bn) per annum, and predicted to rise to $90bn per annum by 2015, it is the largest entertainment industry in the world.

Games are played by hundreds of millions of people around the globe.

The games industry is in transition, moving from analogue to digital, from a product to a service, from a premium to freemium business model, monetising free-to-play games through in-app purchases of virtual goods and services.

These are very exciting times for agile content creators who are able to reach global markets through high-speed broadband, no longer having to go through traditional distribution channels of the analogue world.

Game's failure

But spare a thought for all the staff at Game Group, a previously hugely successful games retailer which failed to adapt to the changing world and keep pace with the digital consumption of content.

Image caption
Tomb Raider was originally developed in Derby, but the most recent titles were made in San Francisco

Game has slipped into receivership bizarrely on the day that the games development industry rejoices at the news of production tax credits being announced.

So while some speak of games in crisis, those in the know are aware that this is a boom industry.

Everybody is carrying a games platform around in their pocket in the shape of a smartphone.

There have been approximately one billion downloads of Angry Birds.

Hundreds of millions of people are playing social games on Facebook, there are 60 million subscribers to Moshi Monsters, a great British success story - and "triple-A" [premier] console games will continue to drive the industry at the high-end.

Expensive base

Hi-tech, high-growth and knowledge-based, the UK games industry has all the characteristics to succeed globally in the digital economy.

Unfortunately, however, the UK is one of the most expensive countries in the world in which to make video games.

Games are as important socially, culturally and economically as music and filmIan Livingstone, Life president, Eidos

There are naturally cheap labour markets in Asia and India and subsidised markets in the West.

Countries such as France, Canada, Australia, China, Singapore and the US all offer national or local incentives such as tax credits, subsidies or better access to finance.

Quebec for example offers a 37.5% salary rebate to employers for staff making video games.

France offers a 20% tax credit. Until today, there was no help whatsoever for UK development studios who have had to operate on an uneven playing field.

Facing many challenges, many had become work-for-hire outfits without IP [intellectual property] ownership as they were sold, relocated or faced going out of business.

'Level playing field'

Today's budget announcement sends a very positive message to the world for the UK to claim it is the best place to develop games and digital content.

The UK is arguably the most creative nation in the world - witness the success of its film, music, TV, animation, fashion, advertising and especially its world-class games designers.

The government's recent announcement on computer science being taught in schools, coupled with today's introduction of a competitive tax regime regarding production, means that UK studios can now compete internationally on a level playing field.

The incentives are now there to encourage inward investment, job creation and for the UK games industry to reclaim its position as a world leader in games production.

Growing up

So what's the big deal about games?

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London-based Beautiful Games Studios developed the popular Championship manager series

Well, games are the product of an exciting marriage between art and technology.

Games are interactive, a compelling non-linear experience that allows the players to control the action themselves rather than watching somebody else having all the fun.

Games are rather good at generating emotions in people playing together socially. Playing Wii Sports in the living room is both socially engaging and also helps to burn off calories.

The simple truth is that games have grown up and everybody is playing; male and female, young and old.

Games are as important socially, culturally and economically as music and film.

They are certainly the preferred entertainment choice of today's youth. Moving out of the bedroom, people are enjoying playing games socially together in the living room or on connected mobile devices.

Games are now part of mainstream culture, a new art form, that helps to define us as who we are as human beings.

Beyond the media hatred of shooters, I hope those who do not play games appreciate the positives. Games can be used as a learning tool as players learn about puzzle and problem-solving, choice and consequence, intuitive learning, micro-management, simulation, communication, social skills, character development, narrative structure and even manual dexterity.

Games-based learning and training is increasing. Games are relevant to children, and who says learning can't be fun? More iPads in the classroom I say!

'Nothing to fear'

Today is like a London Bus day for the games industry.

Nothing for years and suddenly computer science in schools, super-fast broadband and tax breaks all come along at once.

This is a great day for the games industry. Everybody is playing games.

There is nothing to fear. You are never too young to start and never too old to stop.

The industry deserves support and recognition for its contribution to the future of the UK's digital economy.

Ian Livingstone is Life President of Eidos - the publisher behind Tomb Raider, Hitman, Deus Ex and other titles. The firm was taken over by Japan's Square Enix in 2009 and now focuses on games developed in the US, Canada, Denmark, Australia and Sweden.